Slow Compounding

Navin Flourine Revenue grew up by 21.7% Expenses grew up by 19% Profit grew up by 33%

Kotak Mahindra Bank Consolidated Profit grew up by 53% YoY Subsidiaries 1️⃣ 70% of consolidated profit is contributed by Bank. Bank's profit grew up 26%, Net Interest Margin 4.9%, CASA stood at 58%. GNPA 2.24%, NPA 0.62% 2️⃣ 8% profit contributed by Insurance. Insurance business posted positive from negative 3️⃣ 7% profit contributed by Kotak Securities. It dropped by 7% 4⃣ 5% profit contributed by Kotak Prime. It's profit doubled 5⃣ AMC business contributed 4% of consolidated profit. Profit remained flat Overall, yearly basis Book value per share increased by 15%.

Mistake in my journey

I had a smile on my face throughout the video. Don't miss yours!

The Top Guy With 13% allocation, PI Industries has the highest allocation in slow Compounding portfolio. It's a moated business which enjoys sticky revenue stream with stable margin on sustainable growth of 20-25%. This business has been Compounding very consistently without any debt or equity dilutions. The company has shown good track record of capital allocation. Hence, it perfectly fits into the framework of "Re-investment Moat With High ROCE" Key concerns: 1. Successful utilization of QIP money 2. Banning of any molecule 3. How pharma venture will shape up 4. Serial resignation of kMP 5. Low cash conversion ratio of Agro chemicals sectors 6. Cyclical consumption of end user 7. Low profit margin of pharma may hit their epic agro-chem business 8. Succession planning 9. If they can hold up their R&D skill 10. Bio-pesticide development The risk is always what you don't know. But knowing where you may go wrong is very important. If you have heard stories and got impressed and bought stocks, you are marrying someone after the first dates. Nothing wrong. But be prepared for suprises!

Real Pricing Power. Source: Abbott India Annual Report 2022

The Ghajini Guy It's true that there can be some concerns about Molnupiravir for Divis Lab. On Quarterly basis, yearly basis. Divis Lab is a differentiated API business with low cost advantages. CRAMS now contributes to >50% which is very sticky business with no margin pressure. If we are long term investors, we have to come out of the delusion of quarterly or yearly performance. This business is poised for structural and sustainable growth. But it will take time to play out the script. Always remember that market has a short term memory of 12-18 months. Just like the memory guy from Ghajini. And if you can aim for 6-8 years, you can take advantage of market's memory issue. We are invested in Divis Lab. No recommendation. As always.

Gland Pharma Quarterly Results - Investor presentation Will we see same trend in Divis Lab? Eagerly waiting

Mutual Fund Performance Being a retail investor, we don't need to be upset or excited about short term performance. But it is worth keeping track of the development of our active mutual funds. 🔴 Parag Parikh Flexi cap fund: - 0.5% (Bmark 2%) Underperformed 🟢 Nippon India Small Cap fund: 7% up (Bmark -1.4%) 🟢 SBI Small Cap fund: 5.8% (Bmark -1.4%) 🔴 Axis Long term equity fund -9% (Bmark 2.7%) As maximum allocation is on Parag Parikh flexi cap fund, overall Mutual fund portfolio underperformed by -0.1% with respect to BSE 500. It is easy to measure such performance. All of us must do this at least yearly basis. But more important thing is that the reason why you selected thus scheme, is it still there? Is there any fundamental change in the scheme construct. For example: the top allocation of funds, if the fund is changing its strategy, churn ratio, expense ratio, number of stocks, and many more. Of course, more mutual funds we have, more is the work. So, if we are having difficulties to track funds, it is a sign that we have to reduce the scheme. Hope you are tracking your portfolio. And evaluating periodically.

HDFC Bank Total Income grew by 14% Expenses (excluding provision) reduced by 1% Profit grew up by 20% Cost to Income ratio is at 38.6%. Deposit grew by 19.3% CASA grew by 20.1% Retail loan book grew by 21% Rural banking loan book grew by 28%, Corporate loan grew by 16% Capital Adequacy Ratio is at 18.1 (vs 19.1% last year) GNPA dropped to 1.28% (vs 1.47% last year. Net Interest margin at 4%. All Year on Year basis.

BuyHack I have never been a fan boy of Share Buyback because it involves market timing. Management of any companies has few important decisions to make what they want to do with the cash. 1. Invest back in the business 2. Give it to share holder as dividend 3. Just keep in the balance sheet or reduce debt if any 4. Buy back outstanding share Any options that are chosen must increase the shareholders value. The first option is the best among all if it creates ROIIC > 15%. In case, no re-investment opportunity, I like Option 2: Pay Dividend If the profit sits in the locker of companies (Option 3), it is unutilized money. Not earning any interest and fading away in the thin air of inflation. Option 4: Management can buyback the share using cash if they feel the market price is undervalued. But often, the company does good business at the peak of the cycle, earns lot of profit. Certainly, share price will touch new and new high that time. Finding no re-investment option, these companies will announce huge buyback. Warren Buffett repeatedly reminded us that buyback at any price won't add value to the shareholders. To create value, share price matters during buyback. P.S. TCS had announced record amount of share buyback with premium. The maximum price cap was 4500 back then. The day (12 Jan 22) when buyback was announced, share price was around 3850. Today, TCS share price at 52 week low. 2998. Management was buying back share is at 3850 level. And today it is on its way to find bottom. Was the buyback timed well? You know the Answer. Another example: No one can time the market. Not even Management.

The Number Quarterly results will soon roll out. Many investors just keep tracking yearly or quarterly growth. It is important to track the size of companies. Not all companies that we compare in same business line are of similar size. For example, we may think HDFC Bank, kotak bank and Bajaj Finance are of same size. In reality, it can be very different. For HDFC Bank, what they earn quarterly, is of same level of Kotak Bank. So, You can understand the sheer size of HDFC Bank. Bajaj Finance is so small lending NBFC that it's yearly net profit is less than HDFC Bank's quarterly profit. Swinging other way, HDFC Bank is a family man. Kotak Mahindra Bank is a youth graduating from College. And Bajaj Finance is teenager with stout physic.

Non-investing video The concept is very relevant when we are trying to invest and beat the market.

Portfolio Update Sorry that we could not upload portfolio update last month. However, the transactions that were made in May has been updated in online portfolio. This week we will upload video on slow Compounding portfolio update. And create a direct link which you can access seamlessly.🏂 An interesting observation you might have had if you are tracking Slow Compounding portfolio. Alpha went to -10 at the market peak. With time, the alpha is dropping back to normal level. Now, when I am typing this msg, it is at -2.7. With beta 0.85 One note, we don't control alpha. Or beta. We control our emotions and follow a boring process. (And probably the video that we make are equally boring 😊) 🤳 Those who are following us closely, already know that we have another small portfolio of just six stocks. Three of them I disclosed long back: Bajaj Finance, Sunteck Realty, Natural Capsules. We have not added/exited any companies this year from other portfolio. Added few units of Bajaj Finance. At 5900, 5800, 5700, 5600, 5500, 5400, 5300 and 5200 level. Portfolio at 4.8 alpha with 1.3 Beta. In last four years. I don't track this portfolio very often. Way less than Slow Compounding portfolio. 🗒️ A short Update on Race between TCS vs Sunteck: As of now, Sunteck is ahead by 18%. Race time closes at 2030, Diwali Evening.

Undergoing huge capex! Those who are interested, may through this report on Aether Industries.